In an exclusive interview with ET this weekend, Khosla, cofounder of Sun Microsystems, said the startup valuation bubble is being caused by bad ideas and copycats chasing money-making opportunities.

"In Silicon Valley, valuations are by analogy and that's always dangerous... There are some fundamentally new ideas coming out and all of those will result in valuable companies," he said.

"But mixed in there are the copycats that will feel overvalued in few years. If you ask me if there are another dozen fundamental ideas in the next 10 years, the answer is almost certainly yes. But because of that dozen, there will be five dozen really bad ideas that get overvalued. That's the way to think of a bubble," he said.

Expounding on the theme of bubbles, Khosla said stock prices and valuations were sometimes divorced from reality, even as internet usage keeps going up. "There are two types of bubbles. One is economics reflected mostly in stock prices and valuation. I never think of that as reality.

If you look at internet traffic through the bubble in the US dotcom bust, you can't tell where it is. Because internet usage kept going up. It didn't crash the day stock prices crashed. Because prices crashed, it doesn't mean people stop using Facebook. So how do you measure a bubble? Is it the reality of usage or that of valuation. In a valuation sense, you get lots of bubbles. In a real usage sense, you don't."

"In 1999, there was a dotcom bust, but Google was in the middle of that and it survived and did well," he added.

Describing India's consumer Internet war between Flipkart, Amazon and Snapdeal as "a costly battle", Khosla said in 10 years the value of ecommerce will be higher than the value of all the companies combined today, but it may not be the same companies. "The question is, who wins and gets to that point and how expensive it is to get to that point? But if there are a lot of people competing and throwing money at it, then you blow up each other's tanks. Whether the buildup is economic or not is a separate question," Khosla said.

"Then there are other people like Alibaba saying 'I'll come in and spend all this money because I have it. I'll buy myself a way into the business.' That makes building the business expensive."

After finishing his MBA from Stanford, Khosla,60, cofounded Sun Microsystems in 1982, long before building a startup and ignoring top-paying jobs became a cool thing in the Valley.

"When I graduated from Stanford, everybody said there are all these prestigious high-paying jobs. I said I would die if I had to work for Morgan Stanley or McKinsey. I would literally die. They may pay me more but I won't have fun," he said. "I tend to do things that I want to do, not necessarily the things that have the highest return. So I work really hard because it is fun. It's like playing sports or a game I like. I'm not financially driven or maximise."

Known for his often bold commentary, Khosla said that while he has "all the love" for India, he cannot make large investments in the country's fast growing startups being based so far away. "I love India, so I spend time here. But I don't have a business strategy in India. Most people have business strategy; I have more love for the country," he told ET.

"Our strategy is not like some of the others that set up a separate fund and hire investment professionals. But I really very much want to do the things that will help the country. So health is very intriguing in that sense," Khosla said.